LEAKED Course Member Livestream: Tesla and Tradedesk.

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Financial advice remember live stream so

today I wanted to touch on a little bit

of looking into

trade desk that I was doing this weekend

and then we'll do some q a so let's hop

on in and get started with chloride desk

so uh one of the things that I found

really interesting about trade desk

was that trade desk does the work for uh

for Disney and for Disney's

connected TV advertising unit

now advertising is a space that that's

you know getting hammered right this is

uh this is one of the first places to

cut so keep this in mind uh first place

to cut in recession

advertising right okay we know that but

in addition to that

we know that uh we had NBC came out this

morning I want to see I want to see if I

can get exactly what their quote was but

they had a quote and we see advertising

oh this morning it was really good it

was something the effect of advertising

getting hit even more let me see if I

could find that really quick

because that's always a big

issue

uh I'll find that really quick

Okay so

let me see NBC NBC Apple moving some

iPad production to Ada yeah that's not a

surprise they've been talking about

moving to Vietnam and India for a while

here everybody's trying to get away from

China honestly China's like the anchor

that's hitting everyone

uh it's kind of scary

but anyway somewhere there was a comment

this morning and it was sort of it was

perfect mention for this I should have

taken a screenshot of it but I saw a

note about uh advertising demand falling

this morning

and uh that made me really think about

trade desks some more as I was doing

research and trade desk

uh one of the things that's oh here it

is

nbcu CEO advertising Market definitely

getting worse

advertising Market definitely getting

worse so that's interesting

and here's the Art here's an article on

it okay let's look at this together here

so advertising Marketplace has been

worsening says Jeff shell as he

confirmed this morning at a conference

in New York City even so he says

Comcast's nbcu will still grow

advertising year over year for the

current quarter the advertising Market

has been pretty steadily worsening for

the last six to nine months I think it's

gotten even worse really in the last

month or so it's hard to figure out

whether that's because of macro

condition whether that's uh whether

people's businesses are worsening or

rather because people are just uncertain

I tend to believe it's just the

uncertainty it's much more cash than

pricing because it's much more cash than

pricing that's interesting so this this

is very typical in a recession is you

get this this liquidity constraint right

you get a lack of cash that's very very

common so when we jump on over

here we want to write down uh biggest uh

reminder in a recession

cash is King uh and when cash is King

ads are easy to cut so that's the

biggest reminder to remember

uh yeah so we're gonna make a little

note here just because I think it's very

interesting uh Jeff shell

as of these five advertising worsening

uh unsure why

uncertainty Biz whatever it is right so

that's quite interesting to me

because it really aligns well with with

what we're looking at when when it comes

to advertising and it's a really good

update because one of the things

That's Unique is we know that companies

like Google uh have been suffering right

so Google's had sort of flat advertising

year over year in fact we can pull this

quickly let's see here I think uh

YouTube was actually negative which was

quite shocking let's look at this GOOG

goog earnings last month here we go

yeah look at that

so Google's search was actually up year

over year four point two five percent

but YouTube was down 1.85 percent

so basically flat to negative

advertising

so we go back for a moment

to this trade desk dock here trade desk

does what's known as connected TV

advertising uh but not just connect the

TV they do they do a whole lot of

advertising that's outside the space of

what they call the Walled Garden so when

you think of advertising

think of you've got uh direct you've got

sort of Walled Garden so this is going

to be your uh your think Apple App Store

right that's that's a perfect example

here of the Walled Garden uh to some

degree you have YouTube

uh because you can only advertise on

YouTube through Google only right so

it's a type of wild card just like when

you advertise on Apple you can only

advertise on Apple through uh or in the

app store for example through the app

store or through Apple uh I ads boy I

remember when they announced ayats were

like oh our ads are gonna be the best

ever you know I've never seen a very

good uh I've never seen a very good

Apple ad but I remember uh back in even

the Steve Jobs day how he was talking

about how great I ads were gonna be

uh but anyway

wild garden uh Apple YouTube

you've got obviously linear this is just

your regular TV right just people sort

of watching and then you have the

non-linear channels

and a big one right now is uh connect to

TV and the beauty about this about

connected TV at least advertisers say is

hey at least at least we can get some

kind of demographics from people so you

have some benefit you get some form of

data back where you whereas you

basically get no data back uh with

linear TV which is quite interesting

other than what you get from like meals

and surveys and that

now what's fascinating here

is when you look at the projections for

connected TV advertising and you add up

the Disney total for 2023 and you

compare that to YouTube you can actually

see that Disney surpasses both Roku and

YouTube and what's really interesting is

that a lot of the advertising that

Disney does is actually contracted

through trade desk now Netflix

uh decided to go with

Microsoft and so that's important to

know as well right so Netflix is doing

their connected TV through Microsoft

which is weird because you have you know

I want to say one of the um

like the CFO or something from Netflix

is now an executive over a trade desk

but apparently that that didn't help uh

negotiate this kind of contract but it

wouldn't surprise me if in the future

that door is still open for trade desks

to potentially pick up

Netflix

uh at least some of it

some of it uh

in the future

now that's speculative what we know with

certainty is that at least the Disney

and trade desk have have a strong

partnership it's always there's always a

risk that

you know Disney dumps trade desk right

risk what if trade desk gets dumped but

it seems unlikely because Netflix and

Disney uh have suggested

that they don't want to do advertising

themselves right

so they want to Outsource that's their

goal is outsourcing and Outsourcing the

company like either Microsoft or trade

desk it makes makes this a lot easier

for them so that way they can focus on

contact uh content but the introduction

of this ad supported here

uh what Netflix is getting into the

seven dollar a month thing over here

Disney is getting into the ad supported

here the theory at least is that the pie

for connected TV advertising is just

going to explode that you'll have way

more

inventory of of slots to place

and on one hand people think okay well

if you have more and this is this is a

risk factor right

in a recession if you have more

of a pie to place these these

advertisements

is there a potential risk that you're

going to uh lessen the cost per right so

a recession is even more of a pie to

place ads Disney and Netflix uh

Netflix CTV ads

uh does that lesson

the price per and and the answer here is

possibly right especially as businesses

advertise less but if it robs more from

linear TV and provides businesses the

ROI they're looking for or at least a

measurable Roi which is a lot it's a lot

more difficult to measure linear TV

advertising than it is to measure

connected TV then then perhaps

you accelerate the move from linear to

Connected TV during the recession and

this is the time actually where a

business like trade desk could

potentially grow and flourish right

so

this explains I think why you have a

very bullish trade desk throughout their

earnings called

uh they you know they talk exactly here

about that shift from linear to non-uh

or to to basically uh connected TV and

they actually call this land grabbing a

perfect time for land grabbing that this

recessionary time that first of all

they're not seeing weakness and that

instead they think this is the time for

them to land grab and uh and build more

they also talk a lot about their uid2

which is basically their replacement for

cookies it's sort of their way of saying

hey look if we can get an understanding

of what 10 of the audience's behaviors

look is is like

through opt-in cookies or whatever then

we can model the rest of of the 90 of

people who opted out

and we can properly Target ads to

individuals based on their behavior

because we know what the sample set is

doing so therefore we expect let's

restart that really quickly therefore we

know what what everyone else is doing

you know trade desk actually coded uid2

and then they gave it

uh sort of like an open source product

uh to try to increase the amount of

companies willing to use uid2 and it's

actually getting pretty popular

so when we look at the financials for a

company like trade desk let's do exactly

that hold on shorter disk

pull these up here

trade desk here we go

what I thought was very incredible here

is you've got a company growing uh

Revenue pretty decently yeah we'll look

at that in just a second here their

accounts receivables roughly cover their

liabilities and they have almost no debt

so if we wash their receivables with

their current liabilities their accounts

payable which I mean this is nominal

what they've got they're really sitting

on about 1.3 billion dollars of cash

and let's go to their statement of cash

flow because I want you to see it so

they're sitting on 1.3 billion dollars

of cash from operating activities

they're making 375 in a quarter which is

about 125.

per quarter because that's per nine

months over there in in cash so we've

got what I say 1.3

we've got yep 1.3 so I thought this was

incredible say 1.3 in Cash Plus about

generation of about 125 mil

each quarter

uh from the average last nine months

right

and uh purchase equipment the capital

expenditures are super low here that's

that's almost roughly their free cash

flow I mean we do have about 36 mil here

in in property and Equipment but that

was also

that's a yeah

um I mean that works out to about 10 per

quarter whatever plus or minus 125 is

fine there aren't really huge Capital

Investments here so here's a company

that's got positive cash flow you've got

free cash flow you've got a 1.3 billion

and basically free cash

free cash no debt

no debt plus 125 mil coming in each

quarter just from operating

uh and then you look at what else did we

have here

you look at the growth they're seeing

this was the year-over-year growth which

which we expect there's the potential

that this could slow down right 394

divided by 301 that's that puts them at

about 30 Revenue growth here

their GNA expense popped a little bit

due to one-time performance stock based

comp so I'm not terribly worried about

that GNA because that you you just that

is typical on Wall Street and they talk

a bit about their growth let me see if I

can find quickly where they talk about

their growth here what their projection

is

so I went through this pretty detailed

here

oh I loved it when one of the analysts

replied to them and said hey like but

what if people who were watching

connected TV are like you know multiple

people watching connect to TV and

they're like yeah that's the same thing

that happens in regular TV except with

regular you can measure nothing at least

we can measure something it was such a

great counter it was awesome uh so for

Q4

uh pretty steady what we see is 31

Revenue growth up off relatively hard

comps last year of 39 and the political

ramp

uh where's the political ramp in Q4

falls off so that's actually good so

you're maintaining that 31-ish percent

growth

so you're really growing in that that 30

region here not bad

and they give us a a bit of a heads up

here that

our Automotive vertical has seen a bit

of a Resurgence for for advertising I

thought that was very interesting

so remember that Autos advertised less

when there were supply shortages now

we're going into oversupply right

something to keep in mind

there we go uh and this is one of the

things to remember is that when

companies

have to spend more money

on oops

oh I did that when companies have more

Supply uh and this this was the thesis

before we realized oh my gosh we're

heading into a recession generally when

you have an oversupply

what do you do you advertise you spend

more to sell more

and you cut prices

like those those are the two big things

you generally do

the recessionary dynamic makes that a

little bit more challenging because it

does make you wonder okay well well

how much is just going to turn into well

let's just cut prices and not advertise

but there's a danger of that because at

some point you

you know it makes sense for companies to

advertise

because you don't want to be in a

position where you're not advertising uh

and now you're just cut cutting and

nobody knows about it uh and what really

happens is you're now cheapening your

brand value right so that's something

else to consider is

companies shouldn't only cut prices

because that cheapens

the brand

advertising

can solve that even in a recessionary

environment

that means there's a limit

okay

there's

a limit to how much you can

cut prices

it's worth noting

that that doesn't change that you have

advertising getting cut but it makes you

wonder is it possible

that

when the NBC you guy why what's the U

that's NBC Universal right I'm pretty

sure I'm 90 sure that as Jeff shall let

me let me see exactly who this is

uh

uh

Jeff shell CEO of NBC Universal yeah

that's it okay

a subsidiary of Comcast ah yeah yeah

yeah okay all right that's really

interesting is it possible that when

nbcu a subsidiary of Comcast which is a

huge linear TV Advertiser right

is it and like I remember I used to run

ads as a real estate agent on TV with

Time Warner which Time Warner Cable was

bought by Comcast well let me fact check

that I'm pretty sure

attempted purchase Oh is an attempt

did it never happen that's why I was

wondering Time Warner Cable hold on

maybe maybe that never happened

wait Spectrum content Spectrum

Charter before it was bought by Charter

oh Charter ended up buying them

interesting

okay well there was competition for it

fine fine so they were bought by Charter

which is a competitor to Comcast

there we go

so uh but there was in 2014 an attempt

by Comcast that's what I remember

because that's also when I was

advertising I was like right in the

middle of my advertising contract and

all of a sudden I hear this this uh this

this talk about uh yeah you know all of

a sudden you have uh

Time Warner Cable potentially being

bought by Comcast and I remember like

panicking I'm like oh my gosh what's

gonna happen with my ad contract but

anyway is it possible that when the nbcu

CEO a subsidiary of Comcast which is a

huge linear TV Advertiser says

hey we're buying

um

well let me say this when they say hey

advertising is worsening that's what

they said advertising is worsening

going into December is it possible that

that actually means that

AKA Maybe

regular TV advertising is worsening

to the potential benefit of

trade desk right that's possible now

this trade desk earnings call where they

were still talking about 31 growth this

occurred on November 9th so keep in mind

it is possible that things have

deteriorated since then

trade desk earnings call was

uh nov9 so potentially

things have deteriorated since then

that is a potential

what else uh

[Music]

okay good so that's trade desk

can't think of what else to cover with

trade desks today we have questions

let's let's do that

let's talk about

um

some q a here so shoot me some q a

especially if you have q a on

Advertising

we'll talk Tesla in a moment

just wait on the sidelines uh appears

uh what why don't we just yeah until

politicians start buying stocks again

right yeah

no kidding

no kidding

yeah so Roku runs their ads you know I

it's really interesting I've always

thought it was weird how they do it but

they're trying to run ads like almost

kind of like while you're on your your

standby screen let me I wanna I'm gonna

do a little bit more look into their

advertising platform I think that's a

good idea

let's look at that together

how does their revenue how's their

revenue up in net income loss was that

because of the uh stock based comp let

me see

I mean you might

what do we have here

I mean because I see net income it's

small

right it fell and a lot of that was

because of stock based comp it was like

70 mil of that with stock based comp

all right

so let's hop in over here

for Roku so their thought was that they

run ads over here and try to help

dictate at least that's what I remember

from their earnings calls they want to

try to help dictate

um what you click on next right

uh uh I'll say

one sec sorry

all right

so what do we got here American Eagle

Walmart

which doesn't trade desk let's Walmart

as well trade desk

let's see okay really trade desk

oh come on

Google trade desk

the trade desk oh that's annoying they

should buy like the domain trade desk

oh well

and I saw Walmart over here as well okay

no maybe not Wall Street Journal anyway

so I I want to see where their ads are

but I remember in an earnings call they

were talking about how they had this

disability to uh uh

guide people to what they wanted to

watch next

and advertising was supposed to be good

for that like this

like see look at that presented by

Verizon over here I'm covering up the

little presented by Verizon Parts see

this

so it's kind of like while you're on

your menu thinking about what do you

click on next I honestly think it's dumb

okay this is annoying trying to put this

on silent uh uh

there we go

okay so here we go

create ad experience is built for TV

advertise on award-winning original

content so you can put ads in the actual

content or like before the content

better TV viewing starts with Roku

[Music]

free and premium content

backed by Roku data Roku insides blah

blah blah

yeah I don't know

I don't I don't know that terribly much

about Roku I lost a lot of respect for

Roku when they said they wanted to get

into TV manufacturing they they said

that about a year ago oh we're gonna get

into TV manufacturing as soon as I heard

that I'm like you guys are morons sell

like you do not get into TV

manufacturing we're about to get into an

inventory surplus of TVs and

Manufacturing is like the hardest thing

to get into so and I'm like come on man

companies like what is it what's the one

the TCH or whatever uh they make TV so

cheap in the Amazon TVs it's insane yeah

I mean unless you're gonna just like

private label with them I mean that's

different then you're not actually

getting into the manufacturing but

anyway it'd be interesting just to see

some exact uh actual Roku ad examples

Roku had examples

uh

how Baskin Robbins made interactive T

okay well this is interesting

what do we have here

let's see this

how Baskin Robbins made interactive

coupon offers

when you advertise on Roku you can make

every TV ad more creative I mean this is

what Apple used to say back in the day

brand ad airs

overlay

overlay instantly delivered to the

screen

user enters mobile number

offer is sent to mobile number

program returns from ad break and that

sounds like a headache but okay I mean

that's interesting right like you click

a button on the screen and it lets you

uh send that beam the text the the

coupon to your phone because what's

remarkable about this is now not only

they do they collect that you're

somebody who's willing to interact with

the TV ad but you just gave them your

number as well

uh interesting

okay direct to product interactive ad

shows a product oriented overlay on top

of the creative that's interesting okay

advertise on Roku frequently advertisers

on Roku frequently use direct to product

ads to reveal product announcement

coupon or other okay all right

so you get these little overlays yeah

that's not terrible direct to store

Interactive

it shows the address

streamers can add the address to their

phone

would you eat mango ice cream every day

polling ads to help re-engage users

okay interesting you know I I think I

would let the Roku numbers speak for

that

itself

uh rather than

Roku

then speculate on it

but I think that's always the best thing

to do is just let the numbers tell the

story

let's see here

yeah exactly uh picking up pennies we we

actually just talked about that about 10

minutes ago

uh which I understand that you may have

joined after but yes

so here's Roku

and

670 divided by

582 is

15 see that's 15 platform growth year

over year

so that's about half of what trade desk

is doing in growth

okay and what was the nine month growth

1990 divided by 1581 that was 25.8 so a

D cell

on nine months

so you have a deceleration here while at

the same time your

the margin actually looks like it in oh

no that's plot oh sorry that's player

here platform

okay what's the margin

269 oh sorry 296 divided by

670 that's a cost of about 44 percent

cost

and then what was that it was eight

eight five nine divided by

1990 43 percent

cost okay so that's relatively stable

that's fine

up X

503 divided by

295 70 increase in Opex with a lot of

that the sales and marketing side this

doubled

yikes

why sales and marketing doubled I think

is interesting let's what did uh what

did trade desk do I think their increase

in sales and marketing was actually in

line

yeah see here's their sales and

marketing expense went to 85 from

59 they went up 44 percent

whereas Roku just doubled their

advertising

to grow 15 see that's an interesting

note

right look at that Roku

doubled their advertised I wonder if

they're advertising on Roku

Roku doubled their advertising to

increase Revenue 15 trade desk increased

advertising 44 to increase Revenue 30

percent

interesting difference right

so but okay so they still grew revenues

15 but like

but they're also losing money

I mean they're

it looks like they were profitable last

year before their SG a exploded

and their r d

yeah now all of a sudden we went to a

money loser they were profitable

and then they spent money like like

crazy and now they're losing money so

they went from profitability to not

I don't know like that it just it that

seems odd to me right so like I I have

red flags without Roku it to me it's

like uh went from profitable

to not not even close

uh I mean you're you're down

147 mil in the quarter right we could

look if those are one time

that's that's one thing that bothers me

the management decision

to get into TVs

blows my mind

uh

uh White Label would be better or

private label

I'll say private and um yeah the double

of AD spend to increase Revenue 15 like

those are those are three red flags so

which

let's look at their cash flow here for a

moment

yeah here's their cash flow

and their cash flow from operating

activities there was that it actually

came out positive so that's actually

interesting what happened then

oh wow okay the stock based comp was

255.

from a cash point of view so that's

where a lot of expense went

so it makes you wonder how much of that

was one time right

that's possible

255 in in stock based comp a lot of that

could be one time but it'd be worth

looking into that

uh stock based comp

how much was one time

so that's interesting very interesting

uh uh comparison there

let's see if we can do a quick search

here stock based

uh

uh there's any kind of comment on it

here

comments comments comments

yeah the last nine well but that was in

nine months in nine months it was 255.

so that means per quarter it was

actually only 255 divided by three it

was 85 per quarter

in nine months

so about 85 mil per quarter

I mean that you're still at a loss then

so even if you add back the average

you're still at a loss

uh that leaves me a little bit of loss

anyway let's go ahead and get back to a

little bit of uh

more here

Roku probably had a hiring spree just

like every other company probably

Tesla's running ads in China like a

full-on commercial are you serious

uh Tesla

I mean it sounds like China is just hell

right now

Tesla Model 3 Chinese commercial I see

this from 2020.

it looks like they've actually been

advertising in China for a while even in

2016 they made an ad

all right what else do we have here

could restocking the Strategic oil

reserves drive up oil prices and cause

the second Peak inflation

um

I don't think so

I understand the idea of that it's like

you're taking it out of production the

the point is not to restock the oil the

Strategic oil Reserve while

increasing prices you know you you

restock it when prices are falling

and ideally production should be going

up

which it is going up it's going up very

slowly

very slowly

I want to let me see quickly what the

dollar is doing because I'm pretty sure

that's been falling

oh yeah

oh finally

finally the dollar sees liftoff

look at that

we've been on a on a surge for about

six weeks or so now six seven weeks

it's a slow mover but it moves you know

Amazon Fire runs their ads on their home

screen yeah exactly that's that's uh

that's around that Roku why would a firm

be down 10 percent oh is it really

uh

that's actually quite interesting it's

it's a oh wow probably uh fear of the

consumer quite frankly

uh yeah today it's a it's a bloodbath

out here today

what's up volatility

I love it when you sort to see what's up

and the only thing that's basically up

is volatility

oh man that's dirty

who watched my video on open door this

morning oh

oh

dude open door was

oh that rumors true they were so

bankrupt and if you look at the

financials for open door it is so bad I

hope you watch my video where I go

through the these numbers on open door

because it is so bad

like if you want to see what a company

looks like when they're going bankrupt

you need to watch that video I posted

this morning about Open Door you know

I'm not trying to use this as an

opportunity to advertise

uh other videos but it's so bad

anyway

you know it's you know it's bad when

people are comparing Tesla the tattooed

chef

[Laughter]

it's all right you know everybody always

beats up on you when your stock is down

you know

I mean that's normal

how has Revenue up and they had a net

income okay yeah we answered that

question

okay so so let's move on now

from trade desk

to Tesla so we've talked trade desk

uh let's just have a serious convo about

Tesla you know

um

it's pretty wild I I part of me just

wonders how much of this is localized to

China

because I I do think that China is in a

terrible position

let me grab uh something here let me

grab the last Tesla so I could just

write my notes on it so it's in a place

where it makes sense

feel free you're welcome to ask Tesla

questions as well

so

where's my Tesla earnings call

that's odd

hold on I'll just get it

I'll get a new one

oh that's right I watched the Tesla

earnings call live so I don't actually

have the earnings transcript because

when I watch it live I take notes in a

different place duh I'm like why don't I

have the test like usually I'm really

good about sorting my PDS like where my

Tesla earnings call like that's right

that's the one company I don't actually

do the transcript for I just listen to

it

all right

so let's make some notes here okay

so

uh what we know we know that

Q4 was indicated to show slightly slower

than 50 percent growth

via the earnings call

and we know that China is hell right now

when Apple is fleeing China you know

things are bad in China

uh uh Apple today even announced iPad

production is moving to India which

isn't

the easiest to Launch

factories in

so I think you have severe like I I

think that this is this in my opinion is

China's Great Depression

I think their numbers are cooked right

their GDP is totally cooked uh and I

think that

their housing blow up

is destroying

consumption

absolutely crushing it because think

about it

household net worth we know this

household net worth plummeting

leads to lower consumption

more so

in real estate declines than in stock

declines

and remember that in January we've been

saying this for like almost a year now

in January 2022 the Chinese consumer was

already saving 4X

more cash than they were in

January of 2021. notice notice how

different Americans are okay like

Americans are totally different

Americans let's

borrow more and keep spinning baby okay

very different culture very different

the Chinese

uh and I I knew this as a real estate

broker as well are really good with cash

I found the Chinese really respect cash

and risk now this is this is like

drawing with a with a broad brush brush

here right so it's it's it's

stereotyping is what it's doing uh and

then that's not going to be true for

every Chinese person right

but you have a very big shift happening

you have this this respect for cash and

risk at the same time

you have a disdain

uh of the younger generation for factory

assembly style work

right so you have this

gigantic

uh Jai gigantic cluster F of changes in

China

from the housing implosion

to consumption

to

companies pulling out

to trade Wars

to covet zero

uh to uh to poor vaccination campaigns

for the elderly

uh and now you have more popularized

uh dissent

like the protests you're seeing right

which leads to a lack of respect for the

CCP

this is this is literally the definition

of hell

in China

uh in my opinion like you you could not

ask

for

more

[ __ ]

okay like

the reason the reason oil is falling

like plummeting right now

plummeting

after the EU price caps

is because of China

lack of demand

that's a problem

China is huge it's the second biggest

economy in the world

and this ironically actually reiterates

something that I've talked about before

and this is that China is an anchor or

China will be an anchor for inflation so

look at this China is an anchor for

Global growth as a result China will be

an anchor for inflation

I believe that

I really believe that so I think that if

China is an anchor for inflation

then we're we're probably more likely

than not

to see energy costs continue to decline

which unfortunately energy costs

declining

do lead to less desire lower desire for

clean energy which is actually

inflationary

so

you know

if gas

prices fall

less need to buy EV for example right

uh there was like the EV transition will

still happen

but remember that in China if you have

less need for an EV although byd is

doing great right but still if you have

less need for an EV across the whole pie

uh and you have serious growth concerns

along with cash hoarding

you're setting up for what you're seeing

with Tesla

uh uh Shanghai Cuts I actually think

the Shanghai cuts are going to happen

this is this is Kevin's opinion right

I am a big believer of that where

there's smoke there's fire and when you

look at the Google search trends for

Teslas they're going down the lead times

are going down the backlog is being

burnt uh you know

obviously the insurance incentive and

price cut incentive and China didn't

help

insurance and price incentive in China

didn't help

so

then you get into this phase where okay

I guess we're just done in China you

know like for now maybe China just

grinds to a hole and then you wonder can

Shanghai move to more export only

because they batch these right I mean if

you manufacture a car a car manufactured

for the Chinese market belongs in the

Chinese market it's got the Chinese

manuals the labels are Chinese

everything's Chinese right

I want to give you this anecdote

uh the Norwegian Cruise Lines wonder of

the Seas okay guess where that sucker

was going to go first

that launched in 2020. guess where it

was going to go does anybody have a

guess where the Wonder of the Seas I

just went on it in a Caribbean cruise

okay I was just on it guess where that

sucker was supposed to go

Smurf nailed it China

it was fully labeled for China

everything was Chinese

and they had to re-label the entire ship

they relabeled the entire ship because

China's economy just isn't profitable

right now keep in mind the Wonder of the

Seas right now is the largest

cruise ship that exists and he was going

to go to China and they're like

no thanks we's going to the Caribbean we

go into five Sam bankman Prime

okay bookings

watch this bookings in the Caribbean

uh I can't I cannot spell that bookings

in the Caribbean are 105 these are the

loads load value you look at Europe

these suckers are like 80 China has to

be much worse

it's crazy it's crazy so uh you know

this this uh this shift in China I think

is

is very

very much uh not a I don't think this is

a

and I want to be careful because I don't

want to be like blindly bullish right

like I'm not trying to explain this away

this is bad

I think it's bad it's very bad like

Tesla having a demand crisis is the

worst thing that could happen for Tesla

in fact it's exactly what I've been

saying ever since I started buying Tesla

I go as soon as Tesla's demand story

goes away the stock crashes I mean it's

already followed a lot but it just gets

worse

I don't know though that that issue is

contagious to the rest of the world

right so that's the question if you're a

Tesla investor you have to ask yourself

is the demand contagion in China

contagious to the rest of the world

uh I do expect excess demand to

evaporate this I do expect I do think

excess demand in Europe and U.S excess

demand should evaporate in recession uh

however

it should match

production that's the thesis right

thesis

uh China

collapsing

it really suggests uh probably an

adjustment needed in in manufacturing uh

in their manufacturing plans and their

exporting plans so I think what what

means the following for Tesla

means the following for Tesla all right

so first of all we have to know this

Shanghai note Shanghai has the highest

margins for Tesla keep that in mind so

Shanghai collapsing I think means the

following one they have to plan for Less

Chinese production and more exports but

there's a limit

there's a limit here

you don't necessarily

have the supply chains to get

all of the production out of China yet

that's trucks that's boats Etc when I

say boats it's obviously ships let me

change that because some people get mad

at me when I make tiny little mistakes

um

ships

the cost this is beautiful actually the

cost to ship a container from China to

La is now sub two thousand dollars

it used to be twenty thousand dollars

so

the uh the the potential the potential

should be there

to eventually export worst case a

hundred percent

you you wouldn't right but the potential

should be worst case you export 100 of

production out of China

ideally you keep as much

local as possible

but not enough to cheapen the brand

right

so

I imagine this is what Tesla's figuring

out right now is how much can we get

out of China

and how much can we just incentivize

people who are in China

but this Chinese slowdown is bad

and uh it's it's

going to create a growth fear that I

personally don't believe extends to the

US and China

and I think this actually reiterates by

the way this this sends like a bat

signal to the fed and we'll see what CPI

says but I think this is

this is a clear signal why

Elon is shouting at the FED to lower

rates

I mean you're you're financing cars

today car financing today is like seven

and a half percent it's so expensive to

finance a car when I bought my model X

it was 1.49 on my Model X

that's insane

like that's crazy right

on top of that yeah you add the Twitter

issue oh my gosh yeah

yeah Tesla's not quite at 40 margin but

but yeah I mean

you know I think anybody would rather

see Tesla eat it a little bit on margin

but but keep that those deliveries up

Disney channel is shutting down

broadcasting in Russia this month

yeah that's okay

I don't think elon's gonna take Tesla

private

uh

uh yeah yeah you know it's gonna be a

while before I could really look into

something like Amara for uh for crypto

why like if you watch my crypto video

yesterday I got like the most hate ever

on a crypto video on that crypto video

yesterday

but that's just what I believe

[Laughter]

like uh I don't think I'm wrong of

course I'm willing to be wrong that's

what I think what is unique about the

videos I make is I'm willing to have an

opinion and be wrong

uh you know I'm not afraid of that but

uh yeah I got 1.49 a few years ago on my

lease to buy out and sold a car last

year for 1K under the new MSRP oh my

gosh

isn't this a bigger problem for all

other manufacturers of course

everyone what would you need to see in

Tesla to make you sell

uh

Uh Kevin we getting killed in the

streets yeah

um

you know I I always think

I definitely think that the proper

allocation to to Tesla for me is is uh

is much closer to to like

a quarter like 20 25 I think that's a

very good uh allocation to Tesla for me

it's not a recommendation for anyone

else

uh although I you know I think in in

certain circumstances if you had to pick

sort of a basket of stocks uh I you know

that argument could be made as well for

somebody else I don't know I don't know

anybody else's situation but I think

Tesla has a lot

a lot of real power the problem is

they're not as resilient in this

recession as hoped mostly what appears

to be because of China

and that's very unfortunate

so uh

yeah I was thinking about making a video

on the Twitter Biden thing I I I don't

really know what to say it's yeah

can't test yeah but there's there's a

limit to how much you can lower prices

right because uh you know if if uh if

they drop prices say ten thousand

dollars in China then it cheapens the

brand across the world right then

they're like why am I overpaying for

that car here in America right so it's

not that easy

your thesis supports further downside

risk at Riven and Lucid oh yeah oh yeah

uh oh yeah my allocation is way bigger

at the moment yeah yeah it is

um

well that's that's my allocation is much

larger right now because I believe that

uh at some point within the next uh

year or two uh Tesla itself

could be in a substantially

stronger position uh in in terms of its

stock right uh but also also the company

uh I mean I think the you got to get in

a year think about this

think about where we'd be in a year from

now all right so I I think that's just

worth brainstorming

uh

uh let's see here we actually have that

not here

hold on

where are the production numbers

stand by

here

so

these are the capacities right it's not

where we are now

I mean Shanghai is but let's say 750 000

750 plus 250 Plus

250 Plus

550

Plus 100.

so we're at roughly 1.9

call it two mil

okay so in a year from now

uh in one year we should be at around

two mil of vehicle production for Tesla

if we hit 2.1 that would be about

the 50 percent

growth

trajectory

this though assumes

a lot

one

can we sell those Vehicles number two

can we ramp

Austin three can we ramp

Berlin four it's probably going to

require

uh will will commodity prices

cooperate

right decline

and uh and and then we'll we'll interest

rates decline cheaper purchasing right

so I believe the answer here is yes I

believe the answer here is yes I believe

the answer here is mostly mostly and

likely right

so

if you have a different answer to these

questions Tesla stock might not be for

you

you know you have to determine that

yourself

but in a year from now

if you can get out of this 2022 hell

uh to 2023 boom

then then I believe you're in in a

position

uh where Tesla stock should be

substantially more valuable let me see

here

so if we do

I want to compare to I'm going to do my

own number here in a moment but if we

look at

doomberg

so doomberg's forecast for the end of

next year is 554.

doomberg is at 5 or sorry 559 in eps

and then Kevin at 2.1 let me see if I

can get that spreadsheet really quick

let's see here

okay

so if I change this to

2.1 Vehicles two three one two three and

then I go to

zero

for energy just for giggles and a margin

uh well no I'll keep that at a lower

percent I'll keep that alike

one percent yeah one percent that's fair

okay and then I go to an expense margin

of let's I'm going to increase their

margin a little bit to 72 percent

that's their expense margin I know you

can't see anything on screen right now

hold on

crime shares outstanding okay that's

that's fine

hold on

that would get us to

try to figure out how do they get this

eps

this might it might take me a moment to

put this together

hold on a sec number of vehicles shares

outstanding to confirm that

yeah that's that'd be about a hundred no

because they're projecting about 114

bill in rev oh right but if you consider

leases in that altogether that's fine

I'm at 119 bill in revs

that's fine okay I went ahead and fixed

the issue uh at the end I had an issue

with a spreadsheet I wrote here on

Discord that I fixed it and that's

because Tesla's Opex was set to 2025

levels which is twice as high as they

actually are trending today once I fixed

this I was able to project a one-year

price target of at least

328.73 upside for Tesla at 2.1 million

Vehicles produced at a 30 margin and

fifty three thousand dollar average

revenue per vehicle including any FSD

although I do think that uh we we could

be substantially including a lot of

margin of safety here semi trucks

additional FSD Revenue Insurance Revenue

energy revenues although I am including

some energy revenues I try to include as

much of a margin of safety as possible

this would be at a 50pe ratio assuming

50 EPS that would be a one peg and

usually Tesla trades for one and a half

to two Peg so I believe that is an

additional margin of safety uh at a

reduced four and a half million in 2025

in a 6K reduction in Revenue per vehicle

despite FST with 30 margin again FSD

included per vehicle I use a 45pe 45 EPS

growth rate one peg again margin of

safety here since usually we could

reasonably be at one and a half or two

for 2025 I get to about 565 as a price

Target or about 43 per year return

compounded for the next three years as a

projection estimate not a guarantee

obviously these numbers can unlikely

will collapse if margin collapse is less

likely or demand collapses uh I believe

personally only China which I believe is

solvable the growth rate also assumes uh

the Cyber truck inclusions and FSD

supporting margins the next phase of

growth comes from a potential smaller

model which unlocks growth over five mil

production annually in my opinion so in

other words it's really to get above 5

million units a year I think we need to

have a cheaper model I also wrote that I

believe at the end of 2023 3 it makes

sense to substantially diversify down my

personal Tesla Holdings which right now

is depressed because of a Twitter and B

China and I will eventually diversify

into househack and and ETFs do keep in

mind that if you believe in for example

Kathy's ability to rebalance for you

there's some significant tax benefits by

having somebody else in an ETF be able

to rebalance for you because since

you're holding the ETF ticker you can

actually have a portfolio that gets

rebalanced without necessarily incurring

the crazy tax penalties of rebalancing a

portfolio yourself these are what the

attachments look like that I attached uh

they they actually don't come through

very large here which is quite odd let

me go ahead and pull those up a little

larger here and then that way you can

kind of take a screenshot of these that

I'll show you the first that I'll show

you is the 2023 sheet and then the

second one I'll show you is the 2025

sheet so I'll go ahead and let you pause

the video on this here this is the

beginning of the 2023 sheet and when we

get to the second half of the sheet you

can get here it actually looks like I'm

gonna have to divide this into three

halves there we go that is the 2023

sheet and then here's the 2025 sheet

that I have which I'll go ahead and drop

on down here

and then we'll drop on down over here

keep in mind there's likely to be some

additional dilution unless of course

there's a stock buyback so I kind of

kept the share uh shares outstanding uh

the same but again I think I'm being

conservative with my PEG ratio sticking

at one as I do believe historically they

sell for substantially higher uh PEG

ratio there you have it oh leave me a

comment let me know what's stopping you

from joining the courses on building

your wealth the prices are not as high

as you might think they are for example

you can get into the elite Hustlers

course which gives you access to both

live streams for just 407 dollars at the

time of this recording thanks for

watching we'll see in the next one

goodbye